The board of Ted Baker has asked investors to believe in the “significant upside” of its turnaround after rejecting two takeover offers from an American private equity firm.
The fashion brand said that it had received an initial 130p-a-share takeover offer from Sycamore Partners on March 18 and a sweetened offer on March 22 of 137.5p-a-share, which valued the business at £254 million.
Ted Baker told the market on the morning of March 18 that it had not received a bid, but confirmed yesterday that the offer from Sycamore had come later on that day.
The board of the fashion brand said that it had rejected both offers after concluding that they “significantly undervalued Ted Baker and failed to compensate shareholders for the significant upside that can be delivered by Ted Baker as a listed company”.
Ted Baker, which has 560 shops and concessions, was founded by Ray Kelvin in 1988 as a men’s shirt shop in Glasgow. Its shares fell after news of the takeover rebuttal by 2¾p, or 2.2 per cent, to 123½p, valuing the business at about £227 million, although they are a fifth higher than they were before the bid speculation emerged. Analysts had a range of price targets for Ted Baker of 175p to 300p before the takeover interest was made public.
Advertisement
Shore Capital said that the offers from Sycamore “do not reflect the health of the Ted brand equity. The question is: at what premium would investors consider a potential bid?”
Ted Baker’s market value has tumbled by 90 per cent since 2019, when Kelvin, 66, resigned after a “forced hugging” scandal. The business has since issued a profit warning after an accounting error.
Rachel Osborne, its chief executive, has been implementing a turnaround based on cutting costs and its reliance on discounting.
